Middle Class Collapse

The Labor Department reported Thursday that the number of U.S. workers filing new claims for unemployment benefits jumped to 406,000 last week, a three-year high. The last time claims were higher was after back-to-back hurricanes, Katrina and Rita, devastated the Gulf Coast in 2005. The latest dose of bad news came in the wake of a congressional hearing on the impact of rising costs and stagnant wages in a slumping economy. "The title of this hearing is 'The Squeeze of the Middle Class.' I don'

Thursday, July 24, 2008

The Labor Department reported Thursday that the number of U.S. workers filing new claims for unemployment benefits jumped to 406,000 last week, a three-year high. The last time claims were higher was after back-to-back hurricanes, Katrina and Rita, devastated the GulfCoast in 2005. The latest dose of bad news came in the wake of a congressional hearing on the impact of rising costs and stagnant wages in a slumping economy. "The title of this hearing is ‘The Squeeze of the Middle Class.' I don't think it's a squeeze, I think it's a collapse," said Senator Bernie Sanders at the Joint Economic Committee. "The middle class is shrinking, poverty is increasing and the gap between the rich and everyone else is growing wider and wider," Sanders added.

The hearing was held amid fresh evidence of a yawning income gap in the United States. New Internal Revenue Service data show the richest 1 percent of Americans in 2006 garnered the highest share of the nation's adjusted gross income in at least two decades. At the same time, according to the IRS's income-statistics division, the average tax rate of the wealthiest 1 percent fell to its lowest level in at least 18 years.

Among the witnesses at the Joint Economic Committee hearing was Elizabeth Warren, an author and HarvardLawSchool professor. The professor, who had joined Sanders at two town meetings last April 5 in Vermont, testified that median household income, adjusted for inflation, dropped by $1,175 between 2000 and 2007. At the same time, the average family is spending $4,655 more on basic expenses, such as gas, housing, food and health insurance. Gas alone costs $2,195 more for a family making the same commute in May 2008 as it did eight years earlier.